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2019 (3) TMI 537 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRALevy of GST - Supply of goods/services made by brand owner or not - Liquor licence - Contracting Bottling Units (CBU) scope of supply - Applicant permits the CBU to affix the labels etc. on the finished products and packaging. - CBU provides manufacturing services to the Applicant, and is remunerated in the form of bottling charges - whether the aforementioned surplus/ profit earned by the Applicant as the Brand Owner is liable to GST - maintainability of advance ruling aplication - Held that:- As per Section 95 (a) of the CGST Act. 2017 “advance ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - the supply of services or goods or both, if any is not undertaken by the applicant and therefore the said questions cannot be answered by this Authority - also the question whether the Applicant (i.e. Brand Owner) is paying consideration to the Contract Bottling Unit by way of bottling charges does not fall under any of the clauses of sub-section (2) of section 97 of the CGST Act, 2017 and is not maintainable. The only question that is being taken up in this ruling is, which falls under Section 97 (2) of the CGST Act, 2017 is Whether in the facts and circumstances of the' present case, the Applicant (i.e. brand owner) is making a taxable supply to the Contract Bottling Unit? - Held that:- The Applicant, holding various registered brands in relation to Indian Made Foreign Liquor (“IMFL') has approached and contracted with various Contracting Bottling Units (“CBUS”) who hold the requisite licences under the State Excise laws to undertake the manufacture of the IMFL for the Applicant, in return for the payment of bottling charges (and certain agreed upon reimbursements, such as taxes and expenses). The CBUs after manufacturing the IMFL, deliver the said goods to buyers as per the applicant's directions and the sale price for the said goods is received by the Applicant. All the raw materials, packing materials, finished goods, scrap, etc. used by the CBUs are paid for, by the Applicant - From a perusal of the sample agreements submitted by the applicant, we find that the said agreements are on a principal-to-principal basis, the price at which raw materials are to be procured is fixed by the applicant, the risk, property and interest in the manufactured product passes from the CBU to the applicant upon delivery of the product to the carrier noaminated by the applicant, the selling price is as per the directions of the applicant, the sale price of the goods is received by the applicant, the applicant pays consideration to the CBU in the nature of bottling charges which are fixed on a per month case basis, and not the sale price of the manufactured products, the manufacturing activity by the CBU is carried out under the supervision of the Applicant, etc. The amount left with the Applicant after making all of the aforesaid payments is their profit. In the instant case the applicant is not receiving any consideration for allowing the CBU to use their brand/logo etc on the IMFL. In fact the entire process can be seen as the applicant is contracting with the CBUs to get the IMFL manufactured in under their brand name. There is no service rendered by the applicant in this case - It is very clear from the terms of the agreement that there is neither any supply of goods nor services flowing from the applicant. The applicant actually gets the products manufactured by the CBUs. Hence as per GST laws there is no supply of goods or services or both by the applicant as per Definition of 'supply' under section 7 of the GST Act, 2017. Thus, the question “Whether the applicant (brand owner) is making taxable supply to the Contract Bottling Unit” is answered in the negative.
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